The Clean Energy Council (CEC) has joined calls for a national summit on energy market reform to kick-start conversation about practical ways to support the continued transition to clean energy in the South Australia.
CEC chief Executive Kane Thornton said recent reporting of the energy situation in South Australia and the misunderstanding of many commentators demonstrated the complexity of the matter.
“We have been calling for several years for a more strategic approach to energy market reform that can deliver a 21st century energy system driven by renewable energy. Unfortunately it has taken recent events in South Australia to highlight the importance of long-term strategic energy planning,” Mr Thornton said.
“We are calling for major stakeholders, industry and government representatives to come together and lay the groundwork for sensible and considered changes in the energy market that will serve power users better.
“It is unfortunate that the complexity of this issue has resulted in some commentators settling on renewable energy as the root cause of all the challenges in South Australia. This is simply untrue.”
A new report released today by the CEC examines recent trends including power prices, reliability and system security. The report includes analysis that demonstrates wind power output correlates with lower wholesale power prices in South Australia. This is in contrast to a strong correlation between the price of gas and electricity prices, according to the CEC.
“Gas has always been the strongest indicator of electricity prices in South Australia, and the analysis shows that very clearly. At some points last week gas prices were four times their usual rate, and this coincided with very high power prices,” Mr Thornton said.
“Another clear challenge is the limited competition in the state’s energy market. Stronger competition and diversity in energy technologies is key to keeping electricity prices low in South Australia and throughout the country.”
Mr Thornton said reliability remained strong in South Australia, with the Australian Energy Market Operator (AEMO) recently confirming that the SA system is still meeting its reliability requirements of 99.99 per cent of power demand supplied. The current issues relate to fluctuating prices while the interconnector is down and gas is in increasingly shorter supply, he said.
As the transformation of the South Australian energy system continues, the CEC has said range of clear market and system solutions need to be carefully considered to both reduce the reliance on gas-fired generation and drive greater diversity and competition in the market. While these matters are complex, the CEC has suggested a range of technologies that, together, could ensure a reliable, secure, low-cost and low-carbon energy supply. Options that should be actively developed include:
- Encourage the use of energy storage – at customer and network scale – as the technology rapidly falls in cost.
- Accelerate and continue to diversify sources of power generation in South Australia, such as from commercial and utility-scale solar, bioenergy and wind power.
- Strengthening interconnection with other states in order to increase the diversity of the electricity supply and access the cheapest available power across the entire national market.
- Encouraging demand response by reforming the current market and regulatory framework so as to provide stronger incentives for energy users and consumers to engage with the electricity market.
- Refine standards relating to the integration of renewable energy generation to promote more sophisticated network and system support services and interaction with the grid.
“Although these solutions vary in their complexity it is crucial key stakeholders including technology suppliers, networks, industry bodies and regulators engage in a mature discussion about implementing and reforming these measures,” Mr Thornton said.
“The COAG Energy Council plays an important role in these regulatory and market frameworks and the recent appointment of Minister Frydenberg to a combined Energy and Environment portfolio provides a strong foundation for progress on these complex matters.
“The transformation of our energy system is well underway and a collaborative effort is now required. The result will be increased competition that will reduce price volatility and reform the energy market to support the transition to a zero-emissions energy system in the long-term interests of all Australians.”